You can give away £3,000 worth of gifts each tax year (6 April to 5 April) without them being added to the value of your estate. This is known as your ‘annual exemption’.
You can carry any unused annual exemption forward to the next year - but only for one year.
Each tax year, you can also give away:
- Wedding or civil ceremony gifts of up to £1,000 per person (£2,500 for a grandchild or great-grandchild, £5,000 for a child)
- Normal gifts out of your income, for example Christmas or birthday presents - you must be able to maintain your standard of living after making the gift
- Payments to help with another person’s living costs, such as an elderly relative or a child under 18
- Gifts to charities and political parties
There is also no Inheritance Tax to pay on gifts between spouses or civil partners. You can give them as much as you like during your lifetime, as long as they live in the UK permanently.
Other gifts count towards the value of your estate and the people you give gifts to will be charged Inheritance Tax if you give away more than £325,000 in the 7 years before your death.